MAHINDRA & MAHINDRA LTD. | Integrated Annual Report 2022-23

MAHINDRA & MAHINDRA LIMITED 26 2d. Mahindra Susten Private Limited (“MSPL”): Maximum Amount in any Financial Year Higher of (A) and (B) Monetary values p.a. Rs. in crores (A) % of Consolidated Turnover as per the last audited financial statements of the Company for the relevant financial year (B) a) Purchase of power/EPC from MSPL and maintenance costs/charges for solar water pumps; 150 0.15% b) Providing fund based and non-fund based support including equity/ debt/ Inter-corporate deposits (ICD), convertible/ non-convertible instruments/ Guarantee/ security etc., in connection with loans provided and Interest, commission and other related income / expenses; 1,200 1.20% c) Sharing or usage of each other’s resources like employees, infrastructure including IT assets, cloud, IOT and digital engineering, digital transformation, analytics, cyber security, receipt of royalty / brand usage, manpower, management and management support services, owned / third party services and reimbursements; 25 0.025% d) Any transfer of resources, services or obligations to meet its objectives/requirements. 125 0.125% Note: The value of corporate actions, if any, from MSPL including receipt of dividends, tendering securities as a part of buyback offer, receipt of bonus securities, subscribing to rights issue, etc. by the Company that are uniformly offered/applicable to all shareholders in proportion to their shareholding, would be as approved by the Board of Directors/ Shareholders of MSPL. However, the total value of transactions between the Company and MSPL including dividend received will not breach the overall limit for each of the financial years from 2023-24 to 2027-28 which is the higher of the monetary value of Rs. 1,500 crores and an amount which is 1.5% of the annual consolidated turnover as per the last audited financial statements of the Company. 2e. Sustainable Energy Infra Trust (“SEIT”): Maximum Amount in any Financial Year Higher of (A) and (B) Monetary values p.a. Rs. in crores (A) % of Consolidated Turnover as per the last audited financial statements of the Company for the relevant financial year (B) a) Sale/transfer of any security(ies) held by the Company in its subsidiaries i.e. equity, debt or otherwise to SEIT; 850 0.85% b) Infusion by way of primary investment in SEIT; 650 0.65% c) Providing fund based and non-fund based support including equity/ debt/ Inter-corporate deposits (ICD), convertible/ non-convertible instruments/ Guarantee/ security etc., in connection with loans provided and Interest, commission and other related income / expenses; 200 0.20% d) Any transfer/sharing of resources, services or obligations to meet its objectives/ requirements. 300 0.30% Note: The value of receipt of dividends or distribution, etc., if any, from SEIT by the Company that are uniformly offered/applicable to all unit holders in proportion to their unit holding, would be as approved by the Board of the Investment Manager of SEIT. However, the total value of transactions between the Company and SEIT including dividend received will not breach the overall limit for each of the financial years from 2023-24 to 2027-28 which is the higher of the monetary value of Rs. 2,000 crores and an amount which is 2% of the annual consolidated turnover as per the last audited financial statements of the Company. The proposed transactions mentioned in point 2a to 2e above, would be purely operational / integral part of the operations of the Company and in ordinary course of business with terms and conditions that are generally prevalent in the industry segments that the Company operates. 3. Any advance paid or received for the contract or arrangement, if any Based on the nature of transaction, advance for part or full amount of the transaction / arrangement could be paid / received in the ordinary course of business. 4. Tenure Existing (as on 1 st April, 2023) and new Contracts / arrangements / agreements / transactions for a period of 5 years i.e. upto 31 st March, 2028. 5. Justification for why the proposed transaction is in the interest of the Company 5a. Mahindra and Mahindra Financial Services Limited (“MMFSL”): 5b. Mahindra Electric Automobile Limited (“MEAL”): MMFSL is a leading non-banking finance company which provides loans including vehicle financing in the normal course of business and for the purpose and to meet its working capital requirements borrows funds through various sources including issue of non- convertible debentures (“NCDs”), availing term loans, bank loans, cash credit, fixed deposits and availing of inter-corporate deposits from the group companies. The total borrowings of MMFSL as on 31 st March, 2023 aggregated to Rs. 74,945.86 Crores. The proposition is enabling which will help MMFSL to further augment its sources of funds. MMFSL has entered the leasing business, for which it needs to purchase vehicles from Original Equipment Manufacturers (“OEMs”), including the Company which has emerged as a significant player in the auto industry. Purchase of vehicles from the Company helps MMFSL to grow its leasing book. As an NBFC, MMFSL provides various financial services in the areas relating to vehicle financing, leasing & associated services, bill discounting, etc. MMFSL earns interest / fee based income from the Company. MMFSL is part of the larger Mahindra group. It benefits from availing high quality services from group resources and infrastructure instead of investing on its own. These transactions ensure consistent flow of desired services without interruptions, thus creating operational synergies, cost optimisation, optimal utilisation of resources and business efficiencies. MEAL has been incorporated on 25 th October, 2022 to undertake the 4 (Four) Wheel Passenger Electric Vehicles Business of the Company. British International Investment (BII), the UK’s Development Finance Institution and impact investor and the Company had executed a binding agreement to invest up to Rs. 1,925 crores each into MEAL. BII will invest up to Rs 1,925 crores in the form of compulsory convertible instruments at a valuation of up to Rs. 70,070 crores, resulting in 2.75% to 4.76% ownership for BII in the MEAL. The total capital infusion for MEAL is envisaged to be approximately Rs. 11,000 crores/ USD 1.4 billion between FY24 and FY27 for the planned product portfolio. The Company and BII will work jointly to bring other like-minded investors in MEAL to match the funding requirement in a phased manner. BII’s investment is designed to significantly accelerate the availability and adoption of electric vehicles in India and other markets served by the Company. The above transactions will enable MEAL to significantly leverage the broader manufacturing capabilities, product development, design organizations along with the ecosystem of suppliers, dealers, and financiers of the Company. The funds infused by the Company and BII will be utilized by MEAL primarily to create and market a world- class Electric SUV portfolio with advanced technologies. Onboarding BII as an investor will also help the Company to leverage their focus and expertise in ESG and Climate Change.